Investment Appraisal

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Investment Appraisal
attempts to assist the evaluation of the financial position of projects which have been proposed by a business activity
1 of 6
Payback
the length of time it will take the business to repay its initial capital expenditure
2 of 6
Payback (formula)
(remaining initial investment cost to recover x12) / net cash flow of the period its pay back
3 of 6
Average Rate of Return (ARR)
the average annual profit of a project as a percentage of the initial capital investment. the project with the highest ARR will be selected
4 of 6
ARR (%) - formula
(net return - profit per annum x100) / capital outlay. CFF(last yr) : no of yr / Capital outlay
5 of 6
Net Present Value (NPV)
uses discount ratite discount the value of money
6 of 6

Other cards in this set

Card 2

Front

the length of time it will take the business to repay its initial capital expenditure

Back

Payback

Card 3

Front

(remaining initial investment cost to recover x12) / net cash flow of the period its pay back

Back

Preview of the back of card 3

Card 4

Front

the average annual profit of a project as a percentage of the initial capital investment. the project with the highest ARR will be selected

Back

Preview of the back of card 4

Card 5

Front

(net return - profit per annum x100) / capital outlay. CFF(last yr) : no of yr / Capital outlay

Back

Preview of the back of card 5
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